March 1 (Bloomberg) -- Commodities, led by oil, beat
stocks, bonds and the dollar for the first time since July as
the European Union prepared to embargo Iranian crude, the U.S.
economy improved and China took steps to shore up growth.

“There has been a confluence of perfect factors for
commodities,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London. There “are the
oil-supply constraints with geopolitical tensions escalating in
Iran. There was also positive economic news out of China and the
U.S,” he said.

Brent crude futures had their biggest monthly gain in a
year in February as the EU said Jan. 23 it would impose an
embargo from July on Iran’s oil to pressure the nation over its
nuclear program. The Persian Gulf country, OPEC’s second-biggest
producer, stopped selling oil to Britain and France on Feb. 20.

The International Atomic Energy Agency said Feb. 24 that
Iran dismissed the concerns of its inspectors during a two-day
visit to Tehran and had tripled its quarterly rate of producing
20 percent-enriched uranium.

Greek Bailout

The number of Americans filing first-time claims for
jobless benefits reached a four-year low in the week ending Feb.
18, Labor Department data showed, while an index of U.S. leading
indicators advanced. In China, the central bank announced a
second reduction in bank reserve requirements in three months to
bolster lending. Greece got a 130 billion-euro ($173 billion)
bailout from the EU and the International Monetary Fund on Feb.
21 in return for spending cuts and economic reforms.

The S&P GSCI index is off to its best start since 2008,
rising 9.4 percent as of today, partly as declines in the U.S.
currency boosted the allure of investments priced in dollars and
company earnings beat analysts’ estimates. February’s gains were
the biggest since October, as sugar and soybeans rose.

“A shock-free earnings season, improving macro-economic
data out of the U.S., progress on the bailout package for Greece
and a weaker dollar have helped support elevated levels of risk
appetite and one clear beneficiary of that has been the
commodities asset class,” said Ashish Misra, the London-based
head of investment research at Lloyds TSB Banking Group Plc’s
private-banking unit, which manages about $19 billion.

Oil Gains

Brent, the benchmark grade for more than half the world’s
crude, rose 11 percent in February and traded at $125.55 a
barrel on Feb. 24, the highest level since May. It was at
$125.02 at 5:45 p.m. London time today. West Texas Intermediate,
the main U.S. crude, advanced 8.7 percent, rising to $109.95 on
Feb. 25. It was at $108.08 a barrel today.

Rising prices are “a test for the U.S.,” a team led by
Mansoor Mohi-uddin, the Singapore-based chief currency
strategist at UBS AG, wrote in a Feb. 27 report. “Oil is moving
fast up the policy-maker agenda. Event risk aside, policy makers
might want to ask whether their actions are finally starting to
transmit into pricing pressures for commodities.”

Futures Bets

Soybeans jumped 10 percent to a five-month high on the
Chicago Board of Trade in February, the most since 2010, as U.S.
export sales rose and the government forecast that inventories
will slump 25 percent before the 2013 harvest. Sugar advanced
5.8 percent on ICE Futures U.S., the most since July, after
drought cut supplies from Mexico. Lumber traded in Chicago
advanced 11 percent on improved demand from China.

Commodity investments may increase by as much as $40
billion, or 10 percent, in 2012 after the weakest inflows since
2002 last year as investors favor oil, gold and copper, Kevin
Norrish, an analyst at Barclays Capital in London, said Feb. 23.
Commodity assets under management were $399 billion at the end
of 2011, the bank said in a Jan. 26 report.

Open interest, the number of futures contracts that haven’t
been closed or delivered, for 24 commodities from oil to copper
rose 3.3 percent through Feb. 27 to the highest level since
April, data compiled by Bloomberg show. Speculators are the most
bullish since September, Commodity Futures Trading Commission
data showed, with wagers on gains in gold climbing to a five-month high and bets on crude oil rising to the most since May.
Improved Earnings

Improved Earnings

The MSCI All-Country World Index advanced for a second
month, returning 5.1 percent in February after 5.8 percent in
January. The measure, which includes both developed and emerging
market stocks from 45 countries, climbed to 332.44 on Feb. 28,
the highest level since Aug. 1. While all 10 groups in the MSCI
index increased last month, companies most tied to economic
growth had the biggest advances. Technology, financials and
consumer discretionary stocks advanced 7.2 percent, 6 percent
and 5.9 percent, respectively.

Egyptian Co. for Mobile Services led gains in the MSCI
gauge, surging 69 percent, as France Telecom SA agreed to raise
its stake in Egypt’s second-biggest mobile-network operator.
Sears Holdings Corp. jumped 65 percent, the second-biggest
advance, after the retailer announced plans to raise as much as
$770 million through real-estate sales and a rights offering.

“The market’s reflecting confidence that the U.S. and
emerging economies are going to continue to recover,” William
Fries, the Santa Fe, New Mexico-based manager of the $28 billion
Thornburg International Value Fund, said in a telephone
interview on Feb. 27. “Headwinds and adverse publicity have
been in the picture, but by and large, companies are doing well.
There’s lots of cash on the sidelines, and valuations are
reasonable. That has people encouraged.”

Per-share earnings for S&P 500 corporations increased for a
ninth straight quarter during the period that ended Dec. 31,
according to data compiled by Bloomberg. Income dropped 3.3
percent for the MSCI All-Country World Index, the data show.

Emerging Markets

The MSCI Emerging Markets Index climbed 5.9 percent in
February and posted its best start to a year in two decades.
Dubai’s DFM General Index jumped 21 percent, the top gain among
benchmark equity gauges in the world’s 50 biggest markets, as
companies including Emaar Properties PJSC and Dubai Islamic Bank
PJSC reported improved earnings. Egypt’s EGX 30 Index rose 15
percent, extending this year’s rally to 48 percent.

Venezuelan dollar bonds led advances among emerging-market
government debt, returning 13 percent, as investors speculated
President Hugo Chavez may not run in October elections because
of cancer, according to JPMorgan Chase & Co.’s EMBI Global
Index. Chavez’s government has presided over the region’s
highest inflation rate and deterred foreign investment by
nationalizing companies. Shares of Banco Provincial SA, a
Caracas-based lender, rose 42 percent.

Treasuries Decline

U.S. government securities lost 0.5 percent for the month
as of Feb. 28, the worst monthly performance since October,
according to the U.S. Treasury Master index, as demand for the
safest assets waned. This year’s declines follow returns of 9.8
percent in 2011, the most in three years.

The yield on the 10-year Treasury note was at 2.03 percent
today, compared with the record low 1.67 percent on Sept. 23,
signaling the economic recovery may be poised to weaken even as
consumer confidence rises toward pre-recession levels. The U.S.
note yield averaged 3.41 percent during the past five years.

Fed Stimulus

The U.S. economy is gaining momentum after the Federal
Reserve said last month it will keep interest rates near zero
through late 2014.

InterContinentalExchange Inc.’s Dollar Index, which tracks
the currency versus six U.S. trading partners, fell 0.6 percent
on the month. The dollar weakened against 15 of its 16 major
counterparts tracked by Bloomberg.

“There are signs that the U.S. economy is improving, the
labor market in particular,” Ian Lyngen, a government-bond
strategist at CRT Capital Group LLC in Stamford, Connecticut,
said Feb. 24 in a telephone interview. “The Fed has committed
to providing an exceptional amount of policy stimulus for the
foreseeable future. The issues in Europe, while not completely
resolved, are seeing progress made toward dealing their
sovereign credit crisis.”

The yen depreciated 6.1 percent against the dollar, a sign
Bank of Japan Governor Masaaki Shirakawa’s inflation goal is
succeeding where record intervention failed. The yen fell
against all of its 16 major counterparts this month, dropping
7.7 percent against nine developed-nation currencies, according
to Bloomberg Correlation-Weighted Currency Indexes.

The currency plunged to a seven-month low after the BOJ,
which has struggled for more than a decade against deflation,
said on Feb. 14 it aimed for 1 percent yearly gains in consumer
prices and would add 10 trillion yen ($124 billion) to the
economy. Traders are paying record premiums for options to buy
the dollar against the yen for three, six and 12 months. Bullish
bets on Japan’s currency have fallen by almost half.